FxWirePro: EUR/USD bulls to shrug-off gravestone doji and shooting star, major downtrend intact – Activate directional hedges

EURUSD has formed the sloping channel in both minor and major trends (refer daily and monthly charts).

The hammer prompts interim rallies, while the failure swings are observed upon gravestone doji at 1.1303 levels, as a result, the current price is sliding below 21-DMAs, the downswings are yet to get confirmation from technical indicators.

While the major downtrend has also been sliding through sloping channel, where bears retrace 61.8% Fibonacci levels from 2018 highs on the failure swings at channel resistance as both leading oscillators signal bearish momentum (refer monthly chart).

Shooting star pattern pops-up at peaks in the major trend, ever since then you could make out bears have shown their effects, steep slumps have gone below EMA levels and retraced more than 61.8% Fibonacci levels of January 2018 highs (i.e. 1.2612) and January 2017 lows (i.e. 1.0371 levels) (refer monthly chart). 

In fact, we had raised caution for aggressive bulls in our previous post a fortnight ago. For more reading, please refer below weblink:

https://www.econotimes.com/FxWirePro-EUR-USD-upside-traction-only-upon-break-out-above-channel-resistance-major-downtrend-prolongs-below-7-EMAs-1512243

Overall, the current minor trend seems to be little bearish as the current price sliding below 21-DMAs despite some abrupt rallies in the short-run, bears are most likely to extend major downtrend and hit 2-year lows again.

We could foresee more slumps on cards as both leading oscillators (RSI and stochastic curves) and both trend indicators (EMAs & MACD) have been signaling intensified bearish momentum and downtrend continuation respectively. 

Trade tips: At spot reference: 1.1254 levels, contemplating above technical rationale, one can execute one-touch put options strategy. Such exotic option with lower strikes at 1.1238 levels likely to fetch exponential yields than spot moves. 

Alternatively, on hedging grounds, we advocate directional hedging strategy as the ECB’s surprisingly dovish message in the recent past, signaling no hikes in 2019, we see significantly less upside for EURUSD in the near term, while the major downtrend remains intact.

Hence, it is wise to initiating shorts in EURUSD futures contracts of Apr’19 delivery as further downside risks are foreseen and simultaneously, longs in futures of May’19 delivery. Thereby, one can directionally position in their FX exposures. The directional implementation of the same trading theme by further allow for a correlation-induced discount in the options trading also if you choose strikes appropriately.

Currency Strength Index: FxWirePro's hourly EUR spot index is inching towards -3 levels (which is neutral), while hourly USD spot index was at 59 (bullish) while articulating (at 11:05 GMT). 

For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex